Steering into the Skid

Penn Jillette wonders if Obama is skidding or crashing, using the metaphor that steering into a skid is counterintuitive.  While Mr. Jillette's economics is a tad too faith-based for my taste, James K. Galbraith has written a great article in this month's Washington Monthly recommending the mother of all counterintuitive solutions for the current crisis: increases in Social Security and Medicare payments.

It goes like this: We're in a liquidity and savings crisis.  Consumers aren't spending enough to keep the economy going.  At the same time, we're all afraid for the near and far future.  Many of us have only Social Security and Medicare left as our most secure retirement option, now that our IRAs and 401Ks are in the toilet.  If we think we're not going to get those SS and Medicare payments, we're more likely to spend even less.

Thus, if it's guaranteed to us that we'll be getting proportionately more in the future, we'll breath a sigh of relief and look at buying that Chevy Volt.

That's some counterintuitive thinking right there.

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